Why has Mobile Payment not taken off as envisaged?

While in 2014 the overriding idea was all about how the U.S. consumers would soon be paying at checkouts using a smartphone, and mobile payment or e-wallets were getting all the hype. And most financial institutions, payment networks, retailers, wireless operators and startup tech companies immediately took to mobile app services that could be used at a point-of-sale terminal to pay digitally.

Now, fast forward to 2016, whereas in-store mobile payments accounts for just 0.6 percent of the roughly US$ 4.65 trillion in sales for 2016, according to a report by eMarketer.

The U.S. consumer adoption of mobile wallets has developed at a much slower pace than most industry experts had predicted, and it's growing sharply off of a low base in recent years.

Then, one may be forced to ask, why mobile wallets and mobile payments have not taken off?

In some ways, mobile wallets were the solution to a problem that never existed: POS terminals using magnetic stripe cards (and later smart cards) were perfectly efficient.

The main reason that mobile wallets have not taken off, is that none of the mobile wallets on offer have succeeded in delivering a real value proposition to consumers, especially as regards checkout speed and/or financial incentives, such as discounts.

And given the proliferation of mobile wallets, there were confusion at checkouts, as many merchants are not equipped to accept them all.

Albeit, there was no clear financial benefit that would outweigh the costs of accepting card payments, which include interchange fees and the costs of installing POS terminals.

Finally, the consumers are now more aware of cyber risks, and not all are convinced that enhanced security features such as tokenization offers sufficient protection against attacks.